Posted in Employment Benefits Employment Litigation Employment Policies

Employee Turnover: Can Employers Recoup Investments In Their Employees?

New employees need to be trained. Some need to be moved. And, in many business sectors, employers continue to invest in their employees via continued education and training courses. All of these are investments. Their pay off, however, depends on whether the employee stays with the company.

Millennials job-hop like it’s their… well, job. Over 60% plan to leave their job within three years of being hired and with an estimated 10% going to work for direct competitors.[1] Their elders, moreover, are only slightly better; the days of working for decades at the same employer and retiring with a gold watch are ancient history.

Increased attrition creates increased cost to the employer. One study estimates 213% of the annual salary for jobs that require higher levels of education and specialized training.[2] This means that one employee earning $80,000 annually might cost the company between $40,000 and $170,400 in turnover cost.

Can any of the investments in employees be recovered and, if so, how?

Not all new-hire costs can be passed along to the departing employee. Company-specific orientation and training programs are merely sunk costs. But, with a valid repayment agreement, employers may seek the equitable repayment of certain costs from employees who depart before these investments pay dividends.

The details of reimbursable education programs vary slightly state to state. For example, in California, the training must be “voluntary” to the employee in order for it to be recoverable by the employer. Yet, repayment agreements are judicially enforceable throughout the US, even in jurisdictions such as California where restrictive covenants are routinely stricken down:

California Repayment of $30,000 of the fronted costs of a voluntarily undertaken educational program, the benefits of which transcend any specific employment and are readily transportable, is not a restraint on employment. USS-Posco Indus. v. Case, 244 Cal. App. 4th 197, 210 (2016).
Colorado “Any covenant not to compete which restricts the right of any person to receive compensation for performance of skilled or unskilled labor for any employer shall be void, but this subsection . . . shall not apply to: . . . Any contractual provision providing for recovery of the expense of educating and training an employee who has served an employer for a period of less than two years.”  Colo. Rev. Stat. § 8-2-113 (2)(c).
Texas “Work-or-pay” contracts whereby an employee must reimburse an employer for job training if he does not work for the employer after training is not against public policy. Nat’l Training Fund for Sheet Metal & Air Conditioning Indus. v. Maddux, 751 F. Supp. 120 (S.D. Tex. 1990).
Wisconsin Agreement to repay costs does not restrict firefighters ability to work for a competitor and does not operate as a covenant not to compete because the obligation is unconditional, not based on whether the firefighter goes to work for a competitor.   Heder v. City of Two Rivers, 295 F.3d 777 (7th Cir. 2002).

Likewise, relocation and other incentives such as signing bonuses can also be tied to a requisite timeframe of employment post-benefit, with courts generally enforcing timeframes of 12-18 months:

Michigan Employee was required to reimburse his employer for certain relocation expenses in full under agreement promising to do so if he should he voluntarily terminate his employment within the first year. Kvaerner U.S., Inc. v. Minarik, No. 216550, 2001 WL 765895 (Ct. App. Mich. Jan. 26, 2001).
Nevada Contract requiring repayment of relocation expenses to employer if employment terminated within one year for any reason is enforceable. Grimsley v. Charles River Laboratories, No. 3:08-cv-00482, 2011 WL 4527415 (D. Nev. Sept. 28, 2011), aff’d 467 Fed. Appx. 736 (9th Cir. Feb. 3, 2012).
New York Under terms of the employer’s formal offer of employment, it was entitled to repayment of relocation expenses and a signing bonus from its product marketing manager who quit within the first year. Ebenstein v. Ericsson Internet Applications, Inc., 263 F.Supp.2d 636 (E.D.N.Y. 2003).
Ohio An employee was required to repay the $7,600 relocation benefit provided to her, pursuant to a relocation agreement entered into between the employer and employee. Trout v. FirstEnergy Generation Corp., No. 3:07-cv-00673, 2008 WL 4159702 (N.D. Ohio Aug. 6, 2008).
Texas Employee’s commitment to repay relocation costs if he quit within one year is enforced; this was not a restrictive covenant, did not affect the employee’s at-will status, and was not an unlawful penalty. Dresser-Rand Co. v. Bolick, No. 14-12-00192-CV, 2013 WL 3770950 (Tex. App. July 18, 2013).

These authorities form the blueprints for successful recovery of employee investment costs.

  1. Timing. Enter into a clear and simple agreement with the employee before the investment is made, where the employee acknowledges the amount of the investment and agrees to repay it (or agrees to a formula for repayment, if the amount is difficult to determine) if he or she leaves within X years.
  2. Be exact. Tie the recoupment amount to a specific formula or to a set amount associated with the investment. For example, if the employer is attempting to recoup the cost of a $5,000 training, the employee may simply be required to pay the employer back $5,000 if he leaves within one month, and a decreasing percentage of the $5,000 if he leaves within two months, three months, and so on.
  3. Be reasonable. Over-reaching is invariably fatal. Brunner v. Hand Indus., Inc., 603 N.E.2d 157 (Ind. Ct. App. 1992) (“repayment agreement” invalid where employee could be liable for an amount in excess of all wages received); Wilson v. Clarke, 470 F.2d 1218, 1223 (1st Cir. 1972) (reimbursement agreement unenforceable where the employer could not demonstrate that the formula was a reasonable forecast of damages, where it did not adjust for time worked for the employer, or whether the termination was voluntary).
  4. Enforce diligently and consistently. Upon the employee’s termination, inform him or her of the amount owed and, if possible, obtain an the employee’s acknowledgement of the amounts owed and agreement to a repayment plan. Put a procedure in place so that this process is followed with all employees who terminate early.
  5. Be mindful of tax consequences. The employer must take any deduction it took for the reimbursement back into income when it recovers the amount from the employee.  The tax issues associated with repayments are complex.  Employers should consult their tax advisor to determine how to properly report reimbursements and repayments.




Posted in Employment Policies

Suggested New Year’s Resolution

Everything in employment devolves to motivation.  Terminations result from a failure to motivate; so too strikes, turnover, and virtually every other issue facing employment lawyers and HR managers.  Theories abound in the business literature on employee motivation including classics like McGregor’s “theory X” and “theory Y” or Ouchi’s “theory Z”.

With behavioral economics, there is now proof rather than mere theory, test results rather than anecdotes.  Dr. Dan Ariely’s new book – Payoff: The Hidden Logic That Shapes Our Motivations – is barely 100 pages long and easy reading.  You need to promise yourself that you will read this book.

As veterans of the working world, we know what works from experience.  Wrong.  Ariely and his colleagues not only tested money versus other rewards in lab settings but then reversed those experiments by asking test participants to be “consultants” and predict the effect of various motivations.  The results were abysmally wrong: the “consultants” misjudged (pp. 31-32).

This is critical because faith in an untested theory is what businesses (and the lawyers and consultants who offer advice to those businesses) routinely do: “Understanding predictions is important because we often face situations that force us to make decisions based on our intuition, without the ability to first test our hunches.”

Testing shows the fallacies of intuition.

Fn. 13 cites a study that “when the bonus size becomes very large, performance decreased dramatically.”  Sports announcers would say that the players choked; Ariely is more polite and comments only that “[t]his counterintuitive effect stemmed from the stress and fear of possibly not getting the bonus.”

Ariely further challenges views on compensation with his own illustration of how he gamed the compensation point system at MIT (pp. 78-79).  How so?  “When organizations attempt to create their compensation schemes, the first mistake…is to overemphasize the countable dimension.  The second mistake…is to treat the uncountable dimension as if it were easily countable.”

He also indicts the utility of employment contracts: “Speaking of ruining trust and goodwill, let’s take a look at legal contracts.”  This is anecdotal rather than reciting experiments in behavioral economics (but such experiments will likely validate his hypothesis) because contracts “create rules and lists of punishments…approaches [that] only work in the short term…”

But, now to the big finish.  Lab experiments are all well and good but not the real world.  For practical men and women concerned with motivation in the workplace (and casual readers who are skeptics), Ariely offers the Intel experiment.  His team got the assignment to test alternative motivations at a semiconductor manufacturing facility.

This plant operated on a 4 day week with 10 hour shifts, followed by 4 days off.  Intel had been using a monetary bonus on day 1 of each 4 day cycle on the assumption “that after four days off, the chip makers needed an extra boost to get their productivity mojo back.”  Ariely’s team was given permission to design and test alternatives, which resulted in the following experiment:

  • Group 1 continued the status quo.  Workers on the first day of their cycle received a message from the boss as follows: “Good morning. If you reach or exceed X chips today, you will receive $30 in cash.  Good luck.”
  • Group 2 was the control group.  Workers received no message and no incentives.
  • Group 3 workers were offered a pizza incentive message: “Good morning.  If you reach or exceed X chips today, you will receive a voucher for a free pizza at the end of this shift.  Good luck.”
  • Group 4 got offered neither money nor pizza.  Instead, these workers were told on arrival everyone who reached or exceeded X chips today would get text message of congratulations from the plant manager.

You should write down your projected result. But, please include not only which of these groups had the highest production on day 1 of the cycle but also what you think would happen to their production on days 2, 3, and 4.  Then go read this book to be entertained and challenged on the conventional wisdom of employee motivation.

PS: If you are intrigued but impatient, you can watch Dr. Ariely’s lecture on what he covers in chapters 1 and 2 here.  If you are  desperate to check your answer on the Intel study which comprises chapter 3, it is published in the Journal of Management and is available here.

Posted in Employment Litigation International Employment Law

Forum Selection Clauses For U.S. Citizens Working In Another Country?

Choice of law and choice of forum clauses are routine. But, are those clauses enforceable in employment agreements covering U.S. citizens on foreign assignments?  Let’s compare cases involving (1) U.S. employees on long-term assignments in the UK; (2) who each had choice of law and choice of forum clauses; and (3) who each filed suit in U.S. courts under U.S. law contrary to those clauses:

  • Martinez v. Bloomberg LP, 740 F. 3d 211 (2d Cir. Jan. 14, 2014) involved an executive assigned from New York to work in the UK. He signed a local UK employment contract providing not only “that English law governed the agreement” but also that “any dispute arising hereunder shall be subject to the exclusive jurisdiction of the English courts.” Despite Martinez’s assertions of potential procedural problems and damage limitations under English law, Martinez was contractually barred from pursuing any claims – even his statutory claim under the ADA — in U.S. courts.
  • Acharya v. Microsoft Corporation, 354 P.3d 908 (Wash Ct. App. 2015) involved an executive who resigned from her job at Microsoft’s U.S. headquarters in order to be immediately rehired by a foreign subsidiary of Microsoft (MGR) for her assignment in the UK. Her employment contract with MGR provided that the “terms of this agreement shall be construed in accordance with and governed in all respects by the laws of Switzerland” and that “[a]ny dispute, controversy or claim arising under, out of or in relation to this Employment Agreement, … including tort claims, shall be referred and finally determined by the ordinary courts at the domicile of MGR in Switzerland.” Yet, her subsequent claims for gender discrimination arising out of her employment in London were allowed to proceed under Washington state law.

How can U.S. employers best manage sending U.S. citizens overseas?

Understand the Worksite Presumption Rule

When assigning U.S. employees overseas, there is a general rule: the laws of an employee’s physical worksite are determinative. Thus, when in Rome, do as the Romans. By virtue of working there, mandatory local employee protection laws – such as minimum pay rates, working time, vacation, severance and protection from dismissal – will apply. The relevant law for all European Member States is the Rome I Regulations. In brief, under the Rome regime, foreign employees in Europe will benefit from the mandatory laws of the country with which they have the closest connection, which will normally be the country where the employee habitually works.  Both Bloomberg and Microsoft made the correct choice: avoid duplication (i.e., the potential for employees to make claims under both U.S. law and under the law of the country of their overseas assignment) by avoiding U.S. law rather than the reverse.

Customize Paperwork and Avoid Inconsistency

An employer’s best practical protection when embarking on a long-term assignment is to tailor paperwork to acknowledge the specific law of the location of the assignment. Here, in short, is a critical distinction in the cases. Bloomberg localized its choice of law and choice of forum clauses to the locus of Martinez’s assignment while Microscoft localized both for administrative convenience to its European headquarters (Switzerland): a point that the court in Acharya found significant.

But, getting the paperwork right is more than just correctly localizing the choice of law and choice of forum clauses to match the worksite presumption rule. Typically, two separate agreements are advisable:

  • An inter-company agreement between the home country entity and the host country entity (to which the assigned employee is not a party) outlining reimbursement between the companies and the inter-company relationship.
  • An assignment letter (or in some cases local employment agreement) with the individual employee which acknowledges the application of local law and sets out all relevant terms (e.g., length of the assignment; whether the individual will eventually repatriate; salary, benefits, etc.).

If there is a pre-existing underlying U.S., employment agreement, that too needs to be addressed.  It will need to be terminated, amended, or novated by the assignment agreement or a replacement employment agreement so that all documents are consistent. In addition to customizing, these agreements/processes must also be followed in practice. Administrative details – such as where payroll is run, currency of payments, who controls the assignee day to day, etc. – all become critical in determining where claims can be made and which country’s law will apply to resolve such claims.

Be Aware of Exceptions

U.S. employers should be alert to factors that affect the Worksite Presumption Rule:

  • Length and Permanency of Assignment. The longer the employee remains in a foreign location, the more likely he/she will acquire local rights. Shorter-term assignments can help to protect against mandatory application of local laws. As a rule of thumb, under 6 months is considered short-term (as it is also a trigger point for certain tax/permanent establishment risks). There is no bright line, but assignments lasting several years (as in Martinez and Acharya) will be considered long-term with a material risk of local laws applying.
  • Underlying Employment, Home Base, and Citizenship. Whether the underlying home employment will continue during an assignment, eventual repatriation, the employee’s home base and even citizenship can also come into play. Recently a U.S. citizen’s claims under UK law were rejected. Even though he worked 49% of his time there, he maintained his home (and his partner) in Texas, was paid on U.S. payroll in USD. and was notified of his termination in the U.S. Given those facts, the UK tribunal viewed his work there as merely a continuation of his U.S. employment and, thus, insufficient to justify the application of UK law. Fuller v United Healthcare Services Inc and another UKEAT/0464/13.
  • Public Policy. Access to justice locally is also often influential. Some jurisdictions do not afford foreign nationals equivalent employment protection. In fact, in certain Asian and Middle Eastern countries differing laws can apply to local citizens versus foreign assignees. In such locales, choice of law/choice of forum clauses simply won’t work because “an adequate alternative forum” is a sine qua non for any U.S. court to defer to a choice of a foreign forum.
  • Highly Mobile Employees. The place of work for such employees is often debatable. Drawing the line between a very long business trip and an assignment can be tricky. Employees hopping between different countries while on assignment can add a further layer of complexity. This, moreover, is further complicated by the 21st century option to work remotely from a location chosen by the employee rather than the employer. See, Employees Working Far Away From The Office: A Jurisdictional Nightmare?

Let’s return full circle.  Are choice of law/choice of forum clauses valuable and desirable in contracts for U.S. citizens assigned overseas?  Absolutely. Is administrative convenience the primary utility of such clauses?  No: the goal here is to avoid dealing with employment disputes under two sets of laws and in two sets of courts.  Is there a best-practice for pursuing that goal? Yes: absent one of the noted-exceptions, customize your clauses to embrace the law and courts of the assigned worksite.

Posted in Employment Litigation Employment Policies

Walk-Backs: Learning to manage employees by watching America’s political leaders?

Managers often confront workplaces rife with a history of unenforced policies and mistakenly believe that the solution is merely to enforce those long-ignored rules.  Legally, the results of such efforts can be disastrous.

In Curry v. Menard, Inc., 270 F.3d 473 (7th Cir. 2001), a new manager tried to more strictly enforce the company’s cash loss policy.  An employee’s drawer came up short three times in two months, so he terminated her.  The appellate court found that her case warranted a jury trial: the history of lax enforcement predating the new manager, plus less-than-perfect enforcement by the new manager, constituted sufficient evidence of pretext.  The employer settled a few months later.

What could the store’s management team have done differently?  Watch more TV, especially the political news.  In a world where management decisions are now second-guessed by courts and administrative agencies, perhaps there is an object lesson in watching our elected officials and candidates running for those offices.  It doesn’t matter which side of the aisle: all follow the same playbook.

Let’s start with one gambit in the title of McCutcheon and Mark’s classic book on understanding the political game: Dog Whistles, Walk Backs, and Washington Handshakes: Decoding the Jargon, Slang, and Bluster of American Political SpeechThose in the political class never admit error or changing positions.  Instead, a candidate or an official will be “walking back” that position.

Why is this technique popular for political leaders?  Because it is better than all of the other alternatives: flip-flopper, liar, incompetent, etc.  Why is this technique mandatory for business leaders?  Because all of those prove pretext and give easy wins in court to employees.  And that is a problem that is not limited to California.

For example, the NLRB reversed a hospital’s termination of a surgical center nurse who told her supervisor she “didn’t give a ‘fu—’ any more” and engaged in sex talk and profanity around “terrified” coworkers.  Why?  Because the hospital never properly “walked-back” its years of permitting profanity, off-color jokes and bawdy behavior, before that termination.  Inova Health System, 360 NLRB No. 135 (June 30, 2014).

As every politician knows, walking-back is never easy.  Yet, all use this technique.  If in doubt, you can merely google the phrase “walk back” with the name of your most favorite or lease favorite elected official or candidate.  So how do you apply this technique in managing employees?  Here is a four-step plan to consider.

  1. Draft a short memo.  It can be short, even bullet-points.  The purpose is to make a public record of your intent to neutrally enforce policy for legitimate reasons.  You can even use the phrase “we are walking back the past under-enforcement of this policy”.
  2. Get front-line supervisor onboard.  Explain the problem to be addressed and emphasize that they must strictly enforce existing policies, regardless of how things have “worked” in the past.  Make it clear that if they don’t, they will be disciplined.  It only takes one noncompliant supervisor who permits lax enforcement to continue to create the evidence to allow courts and agencies to conclude that this disparate enforcement was a prextext for discrimination.
  3. Be bold.  Walk-backs are public events.  Redistribute and reemphasize existing policies in meetings with employees; explain the problems caused by the history of lax adherence to existing rules; emphasize that lax enforcement ends now.  Give examples of what the policy prohibits and requires.  Make the consequences clear but not unnecessarily draconian.  If you aren’t prepared to follow through on firing anyone who forgets to clock-out even once, don’t threaten it.
  4. Enforce the policy strictly as explained.  Any decisions to not apply the policy because of unique circumstances should be documented (again, bullet points are fine).  This will be critical for you to be able to prove consistency months or years later when you are being pressed in preparation for deposition, motion for summary judgment, or trial.

Admittedly, this feels weird: taking business advice from politicians?  It is, however, more image advice.  Politicians live in a world where public scrutiny is constant.  Their techniques for dealing effectively with that scrutiny have direct application in areas of business where equivalent public scrutiny is now de rigeur, like employees challenging employment decisions in court and with any number of state and federal administrative agencies.

Still dubious?  Then consider Winston Churchill’s view: “Politics is not a game.  It is an earnest business.”

Posted in Employment Policies OSHA/Workplace Safety

OSHA’s Safety “Nudge” to Employers: No Reportable Injuries Is Not Time for a Pizza Party

Think 180 days without an OSHA recordable injury is cause for celebration? Think again.

New OSHA rules are potential game-changers to the status quo on safety.  Those rules require notice must be provided to employees explaining their right to report any injury or illness without fear of retaliation for making the report.  That is easy enough but that is only the beginning.

The rules also contain a directive that employers “must not discharge or in any manner discriminate against any employee for reporting a work-related injury or illness.” 29 C.F.R §§ 1904.35(b)(iv).  Further, it requires that employers “establish a reasonable procedure for employees to report work-related injuries and illnesses promptly and accurately.”

OSHA views this seemingly innocent obligation as its authority for sweeping reviews of employer policies. This portends far more sweeping intrusions into day-to-day shop management.  Let’s consider some specifics.

Do you have rules on immediate reporting of injuries? OSHA asserts that such “rules cannot penalize workers who do not realize immediately that their injuries are serious enough to report, or even that they are injured at all” and promises to carefully scrutinize any disciplinary action against an employee who has violated an employer’s rule about the “time or manner for reporting injuries or illnesses.”

Do you have injury rate-based incentives? OSHA asserts that those are now problematic. Incentive programs based on “injury free” time periods could be considered unreasonable if the policy would deter an employee from reporting a work-related injury. If workers are rewarded for achieving low rates of reported injuries, co-worker peer pressure may discourage reporting. OSHA (after nearly 50 years of silence) is now anti-incentives.

Do you have post-injury drug testing? OSHA cautions that blanket post-injury drug testing policies may deter proper injury reporting. Thus, it now commands an “appropriate balance” – which seems to be less than probable cause but not by too much:

drug testing policies should limit post-incident testing to situations in which employee drug use is likely to have contributed to the incident, and for which the drug test can accurately identify impairment caused by drug use…Employers need not specifically suspect drug use before testing, but there should be a reasonable possibility that drug use by the reporting employee was a contributing factor to the reported injury or illness in order for an employer to require drug testing.

OSHA’s rules are being challenged in court: Texo ABC/AGC Inc. et al. v. Perez et al., Case No. 3:16-cv-01998, in the U.S. District Court for the Northern District of Texas.  The new rules were originally scheduled to begin on August 10, 2016 but implementation has again been delayed until December 1, 2016, pending additional briefing in the Texo case on a motion seeking to enjoin implementation of these rules.

Action Items to Implement:

  • Establish a policy/procedure for employees to promptly and accurately report injuries and illness (if you email me, I will send you my sample);
  • Distribute the reporting procedure with a notice that employees have the right to report work-related injuries and illnesses and will not be retaliated against for exercising that right;
  • Revise any “immediate” injury reporting policies and corresponding “failure to report” disciplinary procedures;
  • Review (and potentially eliminate) employee incentive programs based on injury rates or “injury free” periods; and
  • Revise any automatic post-injury drug testing policies.


  1. Starting January 1, 2017, OSHA’s injury and illness data reports will need to be submitted electronically, unless an employer had ten or fewer employees during the previous calendar year or is categorized as a low-hazard industry.
  2. Compliance with theses electronic reporting requirements will be phased in:
  • Establishments with 250 or more employees must submit information from their 2016 Form 300A by July 1, 2017; all 2017 forms (300A, 300, and 301) by July 1, 2018; and all subsequent years on March 2.
  • High-risk establishments with 20-249 employees are required to submit their 2016 Form 300A by July 1, 2017; their 2017 Form 300A by July 1, 2018; and all subsequent years by March 2.
  • All other establishments with 249 or fewer employees are exempt.
Posted in Employment Policies

#SocialActivism in the Workplace

Hashtags are ubiquitous. The 10 most influential hashtags on Twitter are:

10. #GivingTuesday

9. #YesAllWomen

8. #PrayforJapan

7. #BringBackOurGirls

6. #IceBucketChallenge

5. #Sandy

4. #IndyRef

3. #BlackLivesMatter

2. #LoveWins

1. #Ferguson

(Washington Post, “These 10 Twitter hashtags changed the way we talk about social issues,” March 21, 2016)

Fan, athletes, entertainers, political candidates, and just plain folks are “hashtagging” on social media. So too employees whose social media posts are often accessible to coworkers.  #tensionalert ?  #OMGcallHR?  #PCPolice?

Employee A may see something that Employee B posted on Instagram over the weekend, and be offended to the point where it impacts Employee A’s and B’s work relationship. Or, a customer could see what your employees post and question whether such views reflect the company as a whole.  #uhoh

Muzzles won’t work but clear guidance might.

But, any policies will be effective only if legal.

First, employers must be aware of Section 7 of the National Labor Relations Act (NLRA), which expressly allows employees’ communications about wages, hours and other terms or conditions of employment, in and out of the workplace. See Hispanics United of Buffalo, Inc. and Carlos Ortiz. Case No. 03–CA–027872 (Dec. 27, 2012) (termination of 5 employees held illegal because their comments posted on Facebook are protected in the same manner and to the same extent as comments made at the “water cooler.”); Kaiser Engineers, 213 NLRB 752 (1974), affirmed in Kaiser Engineers v. N.L.R.B., 538 F.2d 1379 (9th Cir. 1976) (employee terminated for writing to legislators was a violation of Section 7: “the reason for the letter was a fear on the part of the Society [of Engineers of which the employee was a part] and its members that relaxing immigration laws to permit increased importation of alien engineers might affect the job security of the members of the Society and their fellow engineers….”).

Second, while private employers may otherwise limit political discussions in the workplace, the same is not true for communications outside the workplace. Multiple states prohibit discrimination or retaliation against employees for engaging in lawful, off-duty conduct including engaging in particular political or social activities or having certain political affiliations – see prior blog post here.

Third, employers must be consistent in applying their policies and practices related to social activism affecting employees in and out of the workplace. This, however, is more difficult than it sounds.  What exactly are employers expected to do when confronting potentially offensive but lawful speech or other conduct?

  • What if one employee (African-American) adds #blacklivesmatter to her email signature and complains that her co-workers (white) are harassing her by adding #alllivesmatter to theirs?

Here, subject to your policies and past practices, it is okay to ask both employees to remove the hashtags from their email signatures.

  • Would the solution be different if this call-and-response occurred on social media?

Yes – requesting employees to remove social or political commentary from their work email signature blocks is not the same as requesting employees to remove such commentary from their private social media pages.

When a complaint by an employee is premised on another employee’s social media posts, companies should follow the same harassment investigation protocols as would be followed for such statements made in other contexts. Here, the NLRB may be right: the water cooler conversations of the 20th century are the social media conversations of the 21st century.

Even if the outcome of the investigation does not reveal harassment or discrimination, this may be a “teachable moment” to remind employees that: (1) they are free to defriend or unsubscribe if they disagree with or do not want to see certain social media posts; (2) their personal opinions may be viewed by coworkers; (3) it should be clear that their personal opinions are just that – their personal opinions (rather than the Company’s opinion); and (4) any social media posts should not occur during working hours.

  • What if a discussion between coworkers on the Presidential election raises Trump’s ban on Muslims and your Muslim employees are offended?

Like any other religious discrimination or harassment claim, you should conduct a thorough, prompt and fair investigation. See e.g., Makhayesh v. Great Lakes Steel, No. 91-108394-CZ (Mich. Ct. App. Apr. 10, 1995) (per curiam) (unpublished opinion) (court reversed a grant of summary judgment for the employer, and held that the evidence was sufficient to let the harassment claims by Muslim employee to go to trial based in part on direct, personal insults, but also in part on coworkers comments suggesting that the US “nuke Iraq and Syria” and “go back [to Libya] and wipe them off the face of the earth.”)

  • What happens if this discussion occurs in a group discussion on social media?

Same song; different verse. You will still investigate as with any other report of harassment.  Context may dictate whether this is either severe or persuasive; context may also dictate whether this is employment-related and what the possible “prompt remedial action” should be.

  • Can you fire an employee for offensive remarks?

Maybe. Context matters.   A purely political statement (e.g., “Make America Great Again”) isn’t racial harassment; thus terminating for that is terminating for supporting a political candidate and thus often a violation of state law. A more obviously harassing statement (e.g., “When Mexico sends its people, they’re not sending their best….They’re sending people that have lots of problems, and they’re bringing those problems with us. They’re bringing drugs. They’re bringing crime. They’re rapists.”) does not grant immunity from Title VII liability because it is a direct quote from a Presidential candidate.   Harassment cases are all difficult to investigate and address; social media merely complicates the already difficult.

  • Is it easier or harder to fire if it is a manager making these communications?

Absolutely easier. Managers never take off their supervisory hats; their conduct and statements follow their presence into work like a shadow; your organization will likely be held legally accountable for their biases; and those positions are outside the reach of the NLRA.

  • What if one of your customers finds an employee’s social media post offensive and inquires as to whether it reflects the Company’s position, or worse, threatens to stop doing business with you?

Advise the customer that our employees’ personal social media posts and opinions are not reflective of the Company’s position whatsoever. Remind the employee that his/her posts on social media may not be on behalf of the Company.

Posted in Employment Litigation Employment Policies

Wellness Program Wars

This should be easy.  Like motherhood and apple pie, everybody should be in favor of encouraging more wellness.  But, in 21st century America, nothing is ever easy; mothers baking apple pies beware.

There are two fronts in the wellness program wars. The first has been playing in court for several years.  The second arises from the Equal Employment Opportunity Commission’s (“EEOC”) new rules on wellness programs issued on May 17, 2016, under the Americans with Disabilities Act (“ADA”) and the Genetic Information Nondiscrimination Act (“GINA”).

Let’s begin with a brief overview.  In general, there are two types of wellness programs.  Health-contingent programs require employees to meet a specific health outcome such as reaching a target cholesterol level, weight, or blood pressure.  Participatory programs simply support healthy lifestyles with incentives such as reimbursement for gym memberships (and, as a result, duck under many of the ADA/GINA potential problems).

A.  The Litigation Front

The EEOC began challenging health-contingent wellness programs in 2014.

  • In a lawsuit against Orion Energy Systems, the EEOC claimed Orion’s program violated the ADA because it required employees to complete a health-risk questionnaire and screening. EEOC v. Orion Energy Systems, Inc., No. 1:14CV01019 (E.D. Wis. filed Aug. 20, 2014). Orion has argued that its wellness program does not violate the ADA because it is protected by a “safe harbor” provision that shields such programs from liability if they are connected to a health insurance plan. That case is still pending.
  • The EEOC also sued Flambeau, Inc. after the company discontinued an employee’s health insurance when he refused to take a health risk assessment or a biometric test as part of Flambeau’s wellness program. The district court ruled in Flambeau’s favor, holding that the company’s wellness program fell under the ADA’s safe harbor. The EEOC appealed. EEOC v. Flambeau, Inc., 131 F. Supp. 3d 849, 856 (W.D. Wis. 2015), appeal docketed, No. 16-1402 (7th Cir. Feb. 25, 2016).
  • In another action, the EEOC sued Honeywell International. EEOC v. Honeywell Int’l, Inc., No. 14-4517 ADM/TNL, 2014 U.S. Dist. LEXIS 157945, at *14 (D. Minn. Nov. 6, 2014). There, it requested a temporary restraining order to enjoin Honeywell’s wellness program, which required employees to complete biometric screenings and refrain from tobacco use. After the district court denied a preliminary injunction, there was a voluntary dismissal.

A core issue in these lawsuits has been the ADA’s safe-harbor provision, which exempts employers from the restrictions of the ADA if their wellness plan is associated with a voluntary insurance program. The EEOC’s new regulations take the position that this safe harbor is subject to its regulations and has declared that its new regulations (effective in January 2017) will eliminate that safe-harbor. 29 C.F.R. § 1630.14 (d)(6). This far exceeds the traditional use of administrative power to interpret statutory law via regulation; it is questionable whether courts will acquiesce in the EEOC’s novel claim of a power to amend statutes via regulation.

B.  The Regulation Front

Under the new EEOC regulations, there are five key compliance concepts:

  1. Wellness Programs Must Promote Health Or Prevent Disease. Wellness programs must be “reasonably designed to promote health or prevent disease.” 29 C.F.R. § 1630.14 (d)(1). Employers cannot simply collect health-related data without providing advice, counseling, or follow-up information to employers. For example, it’s a non-starter for companies to merely use health-related data to estimate future healthcare costs.
  2. Wellness Programs Must Be Voluntary. Employees cannot be forced to participate in a wellness program or be penalized for abstaining from one. Intimidating or threatening employees to join a wellness program violates this “voluntary” mandate. 29 C.F.R. § 1630.14 (d)(2).
  3. Wellness Programs Must Comply with the EEOC’s Limitations on Incentives. The general rule is that if employees must be enrolled in a specific health plan in order to participate in the wellness program, companies may offer financial incentives up to 30 percent of the total cost of self-only healthcare coverage. 29 C.F.R. § 1630.14 (d)(3). There are, however, a number of situation specific variants of that ceiling.
  4. Notice Rules Must Be Honored. If a wellness program asks medical information or includes any disability-related inquiries, companies must provide written notice to the employees describing what medical information will be collected, the purpose of collecting the information, how such data will be used, who will receive it and how the company will prevent unauthorized disclosure of sensitive data. 29 C.F.R. § 1630.14 (d)(2)(iv). The EEOC has published a sample notice for company-sponsored wellness programs to help employers comply with the ADA.
  5. Medical Information Must Be Kept Confidential. Employers must ensure compliance with the requirements under the Health Insurance Portability and Accountability Act (“HIPAA”). 29 C.F.R. § 1630.14 (d)(2)(iv) (C). More to the point, managers deciding the future of any given employee should be firewalled from access to their medical information.

C.  The Practical Front

Employers still considering wellness plans may want to hold off until the litigation dust clears. Employers with existing plans need to gear up to meet the additional requirements outlined in the EEOC regulations (which become effective January 1 of 2017).  But, let’s go beyond both fronts to consider some practical advice.

Like everything else in employment, the duty to reasonably accommodate employees applies equally to wellness plans. For example, accommodations should be made for a hemophiliac if a wellness program requires a biometric screen involving a blood draw.  Additionally, employers may need to provide educational materials in different formats—like large print, braille, or offer sign language—to allow individuals with visual and hearing impairments to participate in the program.

Wellness programs, despite complying with every line in the EEOC regulations, are not immune from disparate impact claims under Title VII and the ADEA. Remember that certain conditions (such as obesity, diabetes and hypertension) may disproportionately affect certain protected groups, but that ought not be a problem: i.e., properly structured wellness plans do not create the requisite adverse employment action.

So, weigh [pun intended] the potential costs as well as the potential benefits in considering, adopting, and managing wellness plans.

Posted in Employment Policies International Employment Law Union Organizing

The Globalization of Labor Disputes

My colleagues saw a line item in the advance sheets and said “this must be wrong, Joe; some reporter has obviously misunderstood.”  The report was simple: a local labor dispute at the El Super grocery stores in several southern California locations is now an international legal issue.  Worse, it was totally true.

El Super, a small chain of 50 supermarkets had a routine labor dispute with Local 770 of the United Food & Commercial Workers (UFCW). Despite twenty-plus bargaining sessions,  the parties failed to reach agreement, and the union resorted to boycotts and a strike.

But this time, the dispute did not take its normal course under the NLRA. El Super found itself embroiled in an international incident.  How could this happen in a small town in Los Angeles County?  Let’s segment that process because it is certain to recur.

First, the UFCW filed a complaint with the U.S. Department of Labor against El Super’s Mexican parent under the “labor side-agreement” to NAFTA. This complaint alleged that the parent’s use of so-called “protection contracts,” which are a lawful part of Mexican labor law, violated employees’ rights to freedom of association.

Second, the unions filed a complaint with the U.S. State Department under OECD Guidelines for Multinational Enterprises. This alleged that El Super engaged in an “aggressive, multi-year campaign of coercion” against workers and of interfering with workers’ rights to freedom of association by threatening,  interrogating, spying on, disciplining and discharging employees because of union activities.

Veterans of U.S. labor relations will see that those might be routine allegations to be litigated at the National Labor Relations Board (which, for all its flaws, looks more advantageous than the alternatives El Super now faced). With these NAFTA and OECD complaints, this local labor dispute had become an international PR nightmare and political football.

This moved from the bargaining table to global PR talking points; similarities to legal strategies for any other labor dispute in the history of Los Angeles County disappeared. Former UFCW President Ricardo Icaza cried out that “an international solution is necessary to this international problem.”

In July, the U.S. Department of Labor (DOL) found that the unions failed to establish that the Mexican government was responsible for allowing the alleged labor law violations but simultaneously expressed “its serious concerns regarding issues raised in the submission.” For its part, the State Department concluded its investigation on the OECD complaint by noting that the allegations were “both material and substantiated.”

Put simply, two separate Cabinet departments publicly condemned this grocery store under international law – and without a trial – due to a local labor dispute at one store in California. There was no sanction other than being pilloried: El Super is now the Hester Prynne of American labor law burdened with the scarlet letter of adverse publicity.

This is emblematic of a growing trend. Businesses increasingly are finding themselves subjected to a huge supra-national labor regulatory regime.  The 2011 publication of the UN Guiding Principles on Business and Human Rights (the Ruggie Principles) has accelerated the process.  By the way, these Principles alone span 127 pages, 35 pages of guidelines and 92 pages of interpretive guidance.

Internationalist views are also infiltrating U.S. labor law enforcement. For example, the International Labor Organization (ILO) considers permanent strike replacements an interference with the right to strike.  Despite the fact that this has long been permitted by the Supreme Court,  the NLRB inched closer to the ILO’s position, limiting the right of an employer to hire replacements if it acted for an “independent unlawful purpose” (a standard purposely ill-defined).

American industrial relations has crossed the Rubicon.  Every labor dispute in the smallest town (Santa Fe Springs, California, where this all began has a population of less than 17,000) is now subject to the same battle cry as at El Super: “an international solution is necessary to this international problem.”

Navigating these “internationalizations” (which is my personal passion) is more than can be fit within this blog post, but let me leave you with three thoughts based on too many nights addressing such attempted “internationalizations” of labor disputes:

  1. Understand that the aspirational statements of today will become the obligations of tomorrow.  A regulatory system is developing, one created primarily through treaty obligations, loan documents, and global union agreements. Many obligations arise from company’s own statements of good corporate citizenship.
  2. Choose words carefully.  What may be commonly understood locally may have different meaning globally. For example, U.S. companies frequently adopt Corporate Social Responsibility or Human Rights policies subscribing to “Freedom of Association.” Yet, according to the ILO, that would require relinquishing the right to hire permanent replacements.
  3. Filter the noise.  It is in the interests of many activists, particularly unions, to magnify the issues, obligations, and problems in pursuit of an unrelated agenda, one which may not always be obvious.  Pay attention to the man behind the curtain.
Posted in International Employment Law

Global RIFs: A Checklist Approach

Global RIFs require careful planning and implementation.

What can be achieved in a day (or a couple of months if WARN applies) in the US can take months (and yes, sometimes years), once taken global. What in the US can  be implemented at no cost or with separation payments that can be enshrined in releases is often far more expensive due to statutory obligation internationally.

But, global RIFs are manageable if carefully planned.  Here is a checklist to guide that planning.








Posted in Employment Policies International Employment Law

A Movie Review And A Legal Critique: Two Days, One Night

Today’s authors are summer college interns from DLA’s Chicago office. 

Two Days, One Night is an award winning film set in Belgium that revolves around an employment dilemma. Here’s the premise:

Sandra is scheduled to return from sick leave on Monday but discovers on the preceding Friday that she is being terminated from her position with a solar panel manufacturer in Belgium. The reason? The boss decided that 16 workers could do the work of 17 so he gave the rest of the employees the option of either taking 1,000 Euro bonuses, or keeping Sandra on the payroll.

With the aid of her friend who chairs the works council at this company, the boss agrees to rerun the vote on Monday. Sandra has only the weekend – 60 hours = two days and one night — to track down her 16 coworkers and persuade them to forfeit a bonus so she can keep her position: a job that Sandra needs not only for the family economy but also for personal stability.

Can employers actually do such a thing?

We interviewed DLA employment attorneys around the world to find out.

Johnathan Exten-Wright, who practices in the United Kingdom, believes legality here depends on the answer to the following question: “is the job redundant or is Sandra targeted for ill health?” If Sandra’s position is redundant, the employer may prove how and why she should be terminated. If Sandra is targeted for her mental health, however, she will likely prevail in a discrimination suit.

Repeatedly, attorneys cautioned that redundancy statutes in their countries place the burden on employers to show that the termination is the best economic option. For example, Hélène Bogaard, who practices in the Netherlands, noted that her country has stringent redundancy statutes in place to protect the employees, like Sandra.

When approaching termination, redundancy laws from Germany to Hong Kong require that the decision meet a standard of “reasonableness.” According to Julia Gorham of DLA’s Hong Kong office, leaving a redundancy decision to a vote, as Sandra’s employer does, would foreclose meeting the standard of reasonableness and render the termination illegal.

While most countries use redundancy statutes to ensure fair treatment of employees, Japan believes that redundancy statutes are… well… redundant. Lawrence Carter, who practices there, referred to Japan as an “employee’s paradise”; Sandra would have been 100% safe in keeping her job if only her film was set in Japan.

Countries without redundancy laws evaluate motives.  Washington, D.C. attorney Joseph Turzi noted that there is nothing unlawful in the U.S. about 16 employees deciding whom to fire but that this delegation makes it difficult to prove that the motive wasn’t to punish Sandra for taking leave (which would violate the Family Medical Leave Act).  “Without a rational explanation,” Turzi cautioned, “a jury will find an illegal one.”

In the United Kingdom, employers are better safe than sorry.  According to Kate Hodgkiss in Edinburgh, “the safest way here is procedural.”  A fair process involves either eliminating a unique job position or using objective criteria (i.e., documented performance).  Kate adds that often employers there utilize settlement payments to sidestep that process — a common practice in the U.S. as well.

Although Two Days, One Night’s employment problem faced legal setbacks elsewhere around the world, what about in Belgium, since the film takes place there?  Even there, it is compelling drama but totally unreal. Soetkin Lateur, counsel with DLA Piper’s Brussels Office, presented no fewer than three different ways in which the film’s scenario was contrary to Belgian law:

  1. firing someone straight off of sick leave suggests illegal discrimination;
  2. incentivizing her co-workers to dump Sandra could constitute an abuse of employer’s prerogatives; and
  3. failing to give Sandra twelve weeks of notice before termination is a separate problem.

Sandra’s employer should have called Soetkin.  Two Days, One Night’s producers should have too but that would have killed the drama in their project.  There is little drama in watching veteran lawyers guide their clients around complicated employment laws.  Yet, for employers with businesses that span the globe who want to run those businesses smoothly – without drama – the stars each should cast is clear:

Soetkin Lateur in Brussels

Kate Hodgkiss in Edinburgh

Joe Turzi in D.C.

Julia Gorham in Hong Kong

Lawrence Carter in Tokyo

Hélène Bogaard in Amsterdam

Jonathan Exten-Wright in London

Each gets: